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>>News Anchor: Well with the down turn in the Jones report today and an unexpected Fed
cut on the way, what's the best way to play the markets? Here with me today is the CBC
Task Force to help you maximize your investment options, Brian Gendreau Investment Strategist
with ING Investment Management and Venita Phillips Vice President and Trust Officer
with Kanaly Trust. Thanks to both of you for joining us today. First of all, you know nobody
predicted this jobs number yet as I do more interviews today people say, oh you can see
it coming the economy is slowing down of course we are going to lose jobs. Where do you come
now was it a surprise or was it not?
>>Brian Gendreau: It was a surprise, I don't know of a single economist who was looking
for a decline in jobs. And there is some funny things about this job report, the ISM Manufacturing
Report that came out on Monday was strong and the employment component was actually
up.
>>News Anchor: How do you reconcile those things?
>>Brian Gendreau: I don't know. Partially I think the problem is the big decline in
state and local government employment because some states are starting school later then
otherwise. But that is not the whole story. The job reports were revised for June and
July as well. There is a lot of weakness in manufacturing.
>>News Anchor: Venita what do you think?
>>Venita Phillips: Well this is one month in isolation and it is a weak number but if
you look back at 92, 1992, 1993, 1995, 96, 97 there was one month of negative job growth
and each of those years we weren't in a recession. When we look at the rest of the charts the
economy looks healthy and weak dollar we believe could be a key factor in continuing to drive
strong corporate earnings as we are able to sell more products overseas.
>>News Anchor: So Venita you think this is a blip and it's not going to continue?
>>Venita Phillips: Well time will tell. It does appear that certainly in the Houston
economy we have jobs that we can't fill. Now it may be difficult to train a mortgage broker
quickly to work in the oil patch. But this is structural unemployment and we know here
we have jobs that we can't fill.
>>News Anchor: Brian what do you think? Is this a blip or are we going to continue down
this road maybe towards recession, I don't want to say?
>>Brian Gendreau: Oh, I think we are going to see a weaker economy the second half of
the year then we saw in the first half of the year. I think the economy is going to
do well to grow at a 2% rate. Now if the Fed cuts rates that may provide stimulus for the
economy that may help the credit crunch that we are in. That may be looking for a stronger
2008.
>>News Anchor: What is your bet on the Fed, Brian?
>>Brian Gendreau: Well we are looking for at least one rate cut at the September 18th
meeting and a strong possibility of another one following.
>>News Anchor: Venita what do you think about the Fed?
>>Venita Phillips: Well the Fed has a dual mandate and that is stable jobs, full employment,
and stable prices. And I think this job report gives us every indication just like we have
been saying from May that there are gonna be rate cuts. We believe that there is going
to be a 25 bases point rate cut at the next meeting. And we will probably continue to
see the Fed do exactly what they did on the way up and be stable on the way down.
>>News Anchor: Alright lets get to strategy how do you play it? Brian, what do you think
you do here?
>>Brian Gendreau: Well I think one of the best asset classes to be in is the one we
have been slightly over weighed in for several months now which is large caps stocks both
in the United States and abroad. Since the Fed cut the discount rate large caps talks
about performance very handedly. They have strong balance sheets and they are also not
dependent on bank credit.
>>News Anchor: Can you get any more specific than that?
>>Brian Gendreau: Well ordinary I could except usually we try and make an allocation to growth
versus value but we are exactly at neutral on that just because sector by sector performance
has not been breaking down on clean value versus growth lines.
>>News Anchor: Venita, what do you think, how do you play this market?
>>Venita Phillips: We are definitely more in favor of growth then value. We believe
that we are beginning to see that trend start to development. We like technology, we like
oil services companies, we like some of the industrials. We like companies that have the
ability to sell their products internationally. The weak dollar is going to be huge for us.
>>News Anchor: Yea. Alright Brian, Venita, thanks to both of you for joining us today.
Have a good weekend.